I have a question regarding whether we are required to request that a contractor submit a proposal and pricing data? We have a contract with one order awarded for about $4.5 million over 7 months. This order will expire soon. We realize that we must extend the effort by 12 months. We have completed an IGCE an expect to award for $7.4 million as the amount for Task Order 2. We have Fixed Labor (T&M) Rates in the contract/Task Order 1. Can we simply award Task Order 2 using the existing rates without requesting a proposal and pricing data from the contractor (sole-source)? Assumes contract agrees with rates. Are were required to ask for a proposal and support?

Other information, although we are increasing requirements/quantity significantly, we are not increasing the number of staff required. We are merely asking they continue to do the same finacial services for a longer period of time. The asset capitalization record clean-up being contracted for will take longer than anticipated.

The current not to exceed value of the contract is $4.5 million and this will soon be reached. We plan on issuing a modification to the contract to increase the value to about $12 million.

Sprout123:

You have to be clear about what you're doing. Are you adding work to the contract? Or are you recognizing that the work originally contracted for will take longer and cost more than you thought? The answer to your question depends on which of those things you are doing, and your post is not clear on that. You say:

Other information, although we are increasing requirements/quantity significantly, we are not increasing the number of staff required. We are merely asking they continue to do the same finacial services for a longer period of time. The asset capitalization record clean-up being contracted for will take longer than anticipated.

At first you say you are "increasing requirements/quantity significantly," but then you say, "The asset capitalization record clean-up being contracted for will take longer than anticipated." Which is it, are you adding requirements or are you recognizing that the job you contracted for entails more work than you expected?

The contract is time-and-materials, right? What FAR payment clause does it contain?

The Contracting Officer is obligated to ensure that the award is based upon fair and reasonable prices. Using cost or pricing data is just one way to do that. Your existing rates are fixed price. The question is does the additional work in task order 2 constitute a basis for the contractor to provide lower prices? Since you said task order 2 doesn't increase the number of staff but just extends the period of performance, it probably does not. If you are comfortable with the rates and can justify them through documentation of fair and reasonable pricing, I would just do a supplemental agreement and modify the contract without obtaining a proposal.

If the contract is T&M and this is merely a matter of the work taking longer and costing more than expected, the contracting officer should use the "total cost" and "ceiling price" provisions of the applicable T&M payment clause to increase the contract ceiling price. In short, the contracting officer would be doing something tantamount to funding an overrun. In that case, all the contracting officer should have to do is check the contractor's revised estimate of the additional hours needed to complete the work. The clauses say nothing about renegotiating labor rates in such cases. The clauses say only that the contracting officer can require the contractor to keep working by raising the ceiling price. That means keep working on what has already been specified at the stipulated rates. The contractor cannot demand higher rates and the Government cannot demand lower rates. I also think that the contracting officer can require the contractor to keep working until the job is done as long as it's willing to pay the bills, even if that means extending the period of performance.

Thus, Sprout's proper course of action depends on (1) type of contract and (2) what he is doing--adding new work or raising the ceiling price of the work already specified in the contract.

Of course, nothing prevents the Government from trying to negotiate lower rates if the contractor will go along.